Stocks fall modestly in early trading after earnings; service sector report still due

Stocks retreat in early morning trading

NEW YORK — Stocks retreated modestly early Wednesday following a mixed batch of earnings.

The decline comes even after a payroll company’s report on job cuts in January was better than expected. A report on the service sector is due out later that is likely to show further signs of an economic recovery.

Stocks have rallied the past two days on upbeat reports that show the overall economy is continuing to rebound. The market retreated late last month on concerns the economic recovery wasn’t sustainable and that a strong 10-month stocks rally was running out of steam.

However, a disappointing earnings report and outlook from drugmaker giant Pfizer Inc. was a drag on the market. Pfizer’s fourth-quarter results fell short of earnings expectations. Its profit outlook for the year also fell short of forecasts.

In early morning trading, the Dow Jones industrial average fell 22.67, or 0.2 percent, to 10,274.18. The Standard & Poor’s 500 index fell 4.47, or 0.4 percent, to 1,098.85, while the Nasdaq index fell 4.34, or 0.2 percent, to 2,185.72.

The ADP jobs report showed employers slashed 22,000 non-farm, private jobs last month. That was smaller than the 30,000 cuts forecast by economists, according to Thomson Reuters. It was the best showing since employment started to decline in February 2008, providing further evidence that unemployment is stabilizing.

High unemployment remains one of the biggest obstacles to a strong, sustained recovery.

The ADP report often signals the strength of the government’s upcoming employment report. The Labor Department puts out its monthly report on Friday.

The government’s report is expected to show employers added 5,000 jobs last month, but that the unemployment rate rose to 10.1 percent from 10 percent in December.

A report from the Institute of Supply Management is expected to show the U.S. service sector grew last month. The trade group’s service sector index likely rose to 51 last month from a revised 49.8 in December. A reading above 50 indicates growth.

The service-sector gauge is watched closely because jobs in the sector account for more than 80 percent of employment. The sector is also highly dependent on consumer spending, which accounts for about 70 percent of economic activity.

Any signs of growth would provide a welcome reassurance the economy and jobs market are improving.

The ISM’s better-than-expected report released Monday on the manufacturing sector helped the market rally after retreating much of the final two weeks of January.